News
News affecting Many Small Businesses
- July 4 2025, President Trump signed the OBBBA which disallows ERTC refund claims for the third and fourth quarters of 2021 filed after Jan. 31, 2024. The statute of limitations on assessments for those claims is extended to six years from several possible starting dates. Before passage of the Legislation, taxpayers had until April 15, 2024, to claim the ERTC for any applicable payroll taxes in 2020 and until April 15, 2025, for any applicable payroll taxes in 2021. The House version would have disallowed ERTC claims for all quarters filed after Jan. 31, 2024, but the Byrd rule prevents changes affecting Social Security from inclusion in reconciliation legislation. For the third and fourth quarters of 2021, ERTC claims were against Medicare taxes. (For a comprehensive understanding of this matter, please consult your accountant.)
- The OBBBA Legislation permanently extends and modifies Section 168 first-year (bonus) depreciation, generally allowing 100 percent depreciation in the first year for certain property acquired and placed in service after Jan. 19, 2025. The Legislation also makes permanent the percentage of completion method for allocation of bonus depreciation to long-term contracts. (For a comprehensive understanding of this matter, please consult your accountant.)
- The OBBA Legislation allows for immediate expensing under Section 179 of the cost of qualifying property up to $2.5 million, with a phaseout threshold that begins to reduce the deductible amount when costs exceed $4 million for property placed in service after Dec. 31, 2024. Under current law, up to $1 million may be expensed and the phaseout threshold amount is $2.5 million. (For a comprehensive understanding of this matter, please consult your accountant.)
- IRS announced March 20, 2025- If you claimed the ERC without reducing your wage expenses and received the credit in a later tax year, you should address the overstated wage expense. According to the IRS, you are not required to file an amended return to correct the overstated wage expenses. Instead, you can include the overstated wage expense amount as gross income on your income tax return for the tax year when you received the ERC. This approach aligns with the tax benefit rule, which requires taxpayers to include previously deducted amounts in income when a later event is fundamentally inconsistent with the premise on which the deduction was based.
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- In September 2023, the Internal Revenue Service (IRS) announced the issuance of a moratorium on the processing of new Form 941-X amended returns that contain Employee Retention Tax Credit (ERC) claims through December 31, 2023.
- On January 31, 2024, the House voted to approve The Tax Relief for American Families and Workers Act of 2024 (the Act), which, among other things, would significantly move forward the deadline for the Employee Retention Credit (ERC) claim submissions date to January 31, 2024.
- Our connections are currently reviewing the Voluntary Disclosure Program that the IRS announced on December 21, 2023 to determine how we can assist clients who want to pay back the money they received after filing an ERC claim. We will work directly with those clients to support them through this process ahead of the March 22, 2024 deadline.
- It is very important for you to have documentation needed to support the ERC claim. Link to documentation needed. Link to FAQ about the ERC. https://www.irs.gov/coronavirus/frequently-asked-questions-about-the-employee-retention-credit#qualifying
- July 26, 2024, IRS issues more warning signs of incorrect claims for the ERC. https://www.irs.gov/newsroom/irs-shares-more-warning-signs-of-incorrect-claims-for-the-employee-retention-credit-urges-businesses-to-proactively-resolve-erroneous-claims-to-avoid-penalties-interest-audit
- How Taxpayers Can Respond to Notices of Claim Disallowance on their ERC Claim - (irs.gov)
- Hurricane Helene | U.S. Small Business Administration (sba.gov)